Military Retiree Cola Watch 2024: COLA Sees Decrease from 2023Updated: October 12, 2023
The Social Security Administration announced a 3.2% increase in the Cost-of-Living Adjustment (COLA) for 2024. 3.2% is a notable decrease from the 8.7% increase beneficiaries saw in 2023.
COLA affects more than 71 million Americans, including Veterans receiving VA disability.
Higher Inflation, Lower COLA
3.2% appears modest compared to 2023’s four-decade high of 8.7% and 2022’s 5.9% – however, 3.2% is still among the largest increases since the 2009 great recession.
Soaring inflation, a resurgent economy and other factors have contributed to large COLA increases. 2024’s modest increase may give some heartache and some relief. Those relying on COLA may have less in their pocket, while the lower figure shows signs of inflation decreasing and a more stabilized economy.
Still, the implications of these adjustments are significant as they affect the financial well-being of a substantial portion of the Veteran population.
When 2024 COLA Rates Go into Effect
The 3.2% increase goes into effect for VA disability pay on Dec. 1, 2023. The first checks with the new rates go out on Dec. 30, 2023.
Social Security benefits go into effect Dec. 29, with checks beginning in January. Supplement Social Security Income and Social Security Disability Insurance (SSDI) payments go into effect in Jan. 2024.
Veterans’ Compensation Cost-of-Living Adjustment Act of 2023
While we’re confident the increased COLA figure will pass, President Joe Biden must still sign the Veterans’ Compensation Cost-of-Living Adjustment Act of 2023 into law, which ties the Veterans benefit increases to Social Security COLA increases.
Once signed, the legislation will direct the VA to increase – as of Dec. 1, 2023 – the rates for VA disability, additional compensation for dependents, clothing allowances for certain disabled Veterans and Dependency and Indemnity Compensation (DIC) for surviving spouses and children.
While Social Security benefits are automatically adjusted annually to keep pace with inflation, Congress must pass legislation annually to provide COLA for Veterans and surviving family members receiving those types of compensation from VA.
How COLA is Determined
The Bureau of Labor Statistics’ Consumer Price Index (CPI-W) determines the annual Cost-of-Living-Adjustment (aka Cost-of-Living Allowance). It is based on the percentage increase of the CPI-W from the previous year’s third quarter versus the current year’s third quarter (July, August, and September).
Veterans who retire during the current calendar year will receive a temporary partial COLA due to already receiving a military pay raise in January (View the 2024 Military Pay Charts here).
- The COLA increase is only set at the CPI-W if the increase is less than 2%.
- If inflation is between 2 to 3% then COLA is set at 2%.
- If the CPI-W is greater than 3% then COLA is set at 1% below the CPI-W.
The CPI-W takes into account eight major spending categories:
- Food and beverages
- Medical care
- Education and communication
- Other goods and services
Who Relies on COLA (Cost-of-Living Adjustment)?
- Retired Military Veterans
- Disabled Veterans – See VA Disability Rate Tables
- Veterans’ Pension Benefits – Veterans Pension Rate Tables
- Survivor Benefit Annuitants – Survivors’ Pension Rate Tables
- Surviving Families of Veterans – Parents’ Dependency and Indemnity Compensation (DIC) Tables
- Social Security recipients
- Federal Civilian Retirees
- Supplemental Security Income (SSI)
- Social Security Disability Insurance (SSDI)
- Eligibility for Medicare Extra Help and Medicaid
- Federal and state food and housing assistance programs
Does COLA Impact Federal Pay Increases?
Pay increases for current federal workers and COLA for retired workers often differ because they are based on changes in different economic variables.
Changes in private-sector wages and salaries determine federal pay increases. The government indexes federal civil service workers pay to private-sector salaries to ensure government pay remains competitive with the private sector.
Cost-of-living adjustments (COLA) ensure that a retiree’s income maintains buying power for the same amount of goods and services annually.
Why We Track COLA at Veteran.com
COLA plays a role in many military benefits – namely, VA disability rates. We believe every Veteran should have access to and understand what these figures mean and how they apply to their benefits.
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